US Army awards $1.21 billion contract for PrSM Increment 2 maritime strike missile production.

The U.S. Army awarded Lockheed Martin a $1.21 billion contract for Precision Strike Missile Increment 2 Early Operational Capability. This indefinite-delivery, indefinite-quantity agreement establishes the production route for seeker-equipped missiles designed to engage moving maritime and land targets. The procurement supports accelerated rapid fielding initiatives to expand deep-fires capabilities and replenish strategic inventories.

The five-year contract runs through September 13, 2031, with specific quantities and work locations determined through individual orders. Increment 2 integrates a combined passive radio frequency and imaging infrared terminal seeker into the baseline PrSM surface-to-surface missile framework.

Related topic: US Army accelerates HIMARS PrSM Increment 2 anti-ship missile deployment under Rapid Fielding path

The U.S. Army awarded Lockheed Martin a $1.21 billion contract establishing the Early Operational Capability production path for the PrSM Increment 2, a seeker-equipped variant designed to strike moving maritime and relocatable land targets. (Picture source: US Army)

On September 14, 2026, the U.S. Army awarded Lockheed Martin a $1,211,234,988 contract for Precision Strike Missile (PrSM) Increment 2 Early Operational Capability, establishing the production route for the seeker-equipped PrSM while the production of Increment 1 is simultaneously increasing. This contract is a cost-plus-fixed-fee and firm-fixed-price IDIQ running through September 13, 2031, with quantities, funding, and work locations determined through individual orders rather than fixed by the $1.211 billion ceiling. The award came 11 days after the U.S. Army moved Increment 2 from Major Capability Acquisition to Middle Tier of Acquisition-Rapid Fielding and 186 days after its first flight on March 12, 2026. The Increment 2 uses a combined Passive RF and Imaging Infrared (IIR) terminal seeker, extending the target set from fixed-coordinate attack to moving maritime and relocatable land targets.

The $1.211 billion ceiling does not buy a publicly specified number of missiles. Earlier Army planning called for 120 Early Operational Capability (EOC) missiles plus engineering and manufacturing development work, with Increment 2 IOC planned for FY2028, but the September IDIQ does not confirm that all 120 have been ordered. Dividing $1.211 billion by 120 would produce $10.09 million per missile, but that figure would incorrectly allocate development, testing, and other contract work entirely to missile procurement. The five-year vehicle instead permits individual production and development orders as the configuration matures. This is also separate from the $8.4 billion June 2026 modification that raised the broader PrSM contract ceiling to $13.3 billion and extended its production through 2032.

The Precision Strike Missile (PrSM) is a ballistic missile roughly 4.0 m long and 430 mm in diameter, which uses solid propulsion and carries a roughly 91 kg (200 lb) blast-fragmentation warhead. Increment 1 uses INS/GPS guidance and has a stated range of at least 500 km, while Increment 2 adds passive RF and imaging-infrared terminal sensing so the missile can acquire a target after it has moved from its pre-launch coordinates. The March 12 test covered 350 km, equal to 70% of Increment 1's stated 500 km minimum maximum range, and included the deployment of seeker protective covers and collection of onboard performance data. That 350 km flight does not establish Increment 2's maximum range, as the program's 1,000-km-or-more range objective belongs to Increment 4, making Increment 2 primarily a guidance and target-set modification rather than the principal PrSM range extension.

The missile diameter directly doubles ready-round capacity relative to the earlier ATACMS. One pod carries two 430 mm PrSMs instead of one 610 mm ATACMS, giving an M142 HIMARS two ready PrSMs and a two-podded M270A2 four. Six HIMARS therefore carry 12 PrSMs instead of six ATACMS, while six M270A2s carry 24 instead of 12, without increasing launcher numbers. The U.S. Army also avoids introducing a separate coastal defense launcher because the Increment 2 retains HIMARS and M270A2 compatibility. Increment 1 had already progressed through soldier firings and operational testing before Increment 2 entered production, allowing the new variant to reuse applicable hardware, software, and test evidence rather than repeat qualification of the entire missile. GAO reported that Increment 1 entered production in July 2025 after 11 flight tests and that nearly 100 PrSMs had been delivered by early 2026.

The March 12, 2026 flight is the main physical benchmark preceding the September contract: a HIMARS launched Increment 2 to 350 km while the missile exercised the new seeker configuration, deployed protective covers, and recorded validation data. The program was still in technology maturation and Preliminary Design Review, with additional 2026 flights planned, when the Army committed to the EOC contracting path. Increment 2 therefore entered early production planning before completion of its flight test sequence, but with the Increment 1 missile architecture already substantially qualified. The remaining burden is subsequently concentrated on multi-mode seeker integration, target discrimination, and moving-target engagement rather than proving an entirely new missile and launcher combination. This concurrency also reduces the interval to fielding, but makes the performance of the remaining seeker-focused tests particularly important before the planned FY2028 IOC.

Maritime targeting shows why the new seeker matters. A ship at 25 knots moves 772 m per minute, 11.6 km in 15 minutes and 46.3 km in one hour; at 30 knots, it moves 926 m per minute, 13.9 km in 15 minutes, 27.8 km in 30 minutes and 55.6 km per hour. A target track already 30 minutes old can therefore place a 30-knot ship nearly 28 km from its previous position before missile flight time is added. Increment 2 can search for the vessel during terminal flight, but the HIMARS still requires external target identity, position, course and speed sufficiently recently to deliver the missile into the seeker's acquisition area. The practical anti-ship engagement chain therefore remains detection, identification, track generation, transmission, authorization, launch, midcourse navigation and terminal acquisition. Missile range alone does not determine the effective maritime engagement distance because track age and sensor-to-shooter latency determine how large the terminal search problem becomes.

The production numbers are substantially larger than the quantities associated with PrSM's initial fielding. FY2027 planning calls for 680 missiles through discretionary funding plus 454 Increment 1 missiles through multiyear funding, totaling 1,134 missiles, equivalent mathematically to 94.5 per month or 21.8 per week if distributed evenly. The industrial expansion already includes $175 million specifically to increase the PrSM Increment 1 production tooling from a rate of 400 to 550, while another $100 million supports Increment 2/4 anti-ship seeker development. GAO reported that nearly 100 missiles were delivered by early 2026 and a U.S. Army plan to accelerate delivery of more than 800 through FY2030, illustrating the difference between previous output and the quantities now being funded. Increment 2 adds seeker electronics, integration and variant-specific testing to a supply chain already being expanded for propulsion, warheads, electronics, containers and final assembly.

The production increase also follows the PrSM's first combat expenditure in 2026. An estimate for the first 100 hours of Operation Epic Fury attributed roughly 16 PrSM launches to a replacement cost of $25.9 million, or $1.62 million per missile within that estimate, while total offensive strike munition expenditure reached roughly $1.5 billion. By August, PrSM and ATACMS stocks had been heavily depleted while the Army was already replacing ATACMS with PrSM, involuntarily linking wartime replenishment directly to the ongoing transition between missile generations. The planned 1,134-missile FY2027 procurement equals 70.9 times those estimated 16 early-war PrSM launches, indicating a requirement extending well beyond simple replacement of expended rounds. The $1.211 billion Increment 2 contract therefore adds a second inventory requirement during that rebuild: maintaining high Increment 1 output while producing a seeker-equipped missile for moving targets.

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Written by Jérôme Brahy

Jérôme Brahy is a defense analyst and documentalist at Army Recognition. He specializes in naval modernization, aviation, drones, armored vehicles, and artillery, with a focus on strategic developments in the United States, China, Ukraine, Russia, South Korea, Türkiye, and Belgium. His analyses go beyond the facts, providing context, identifying key actors, and explaining why defense news matters on a global scale.